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Comparing unemployment rates by race: The Great Recession vs. COVID-19

During the Great Recession, between 2008 and 2010, the unemployment rate climbed gradually and then slowly declined over nearly a decade. During the COVID-19 pandemic, between February and April 2020, the unemployment rate spiked to historically high levels but quickly dropped and had largely returned to pre-pandemic levels by April 2022, just two years later.

These are overall patterns, but do they hold across different racial and ethnic groups? To see how the unemployment rate differs by race and ethnicity within each recession, we can look to FRED. Our FRED graph above plots the unemployment rate for Black, White, Latino, and Asian workers—in blue, red, green, and purple, respectively—from October 2006 to the latest available data. Historically, Black workers have usually faced the highest unemployment rate, followed by Latino workers. The unemployment rates of White and Asian workers closely track one another, with Asian workers generally facing the lowest unemployment rate.

COVID-19 recession

During the COVID-19 recession, Latino workers suffered the largest shock: Their unemployment rate skyrocketed from 4.3% in January 2020 to 18.8% by April 2020—a 14.5-percentage-point increase. Asian workers suffered the second highest increase (11.4 percentage points), followed by White workers (11 percentage points) and Black workers (10.3 percentage points). Unemployment rates have since been on a rapid and steady decline. By April 2022, rates had dipped below January 2020 levels for Black and Latino workers, while remaining only 0.1 percentage point above for both White and Asian workers.

Great Recession

On the other hand, unemployment rates gradually climbed over the Great Recession period. Consistent with historical patterns, Black workers faced the highest unemployment rate throughout the episode, followed by Latino workers. By June 2009, the two groups had seen comparable increases in unemployment rates (from pre-recession levels in November 2007) of 6.3 and 6.2 percentage points, respectively. Even though unemployment rates increased by over 4 percentage points for both White and Asian workers over the same period, they faced low unemployment relative to Black and Latino workers. The gradual recovery pattern holds, with unemployment rates stabilizing around pre-recession levels in mid to late 2016 for all four groups.

How this graph was created: In FRED, search for the seasonally adjusted unemployment rate for one group, e.g. “Unemployment Rate – Black or African American.” From this graph, click “Edit Graph” at the top right corner and navigate to the “Add Line” tab. Search for the unemployment rate of next group, e.g. “Unemployment Rate – White,” and click “Add data series.” Repeat for the remaining groups.

Suggested by Serdar Birinci and Ngân Trần.

Something changed in Black unemployment

Unemployment data reveal several differences for race and gender

This post is a bit long, with a puzzling observation and, even after five FRED graphs, no definitive explanation. But sometimes the journey must be the destination…

The (first) graph above shows unemployment rates by race and gender since the start of the Great Recession. It’s clear men’s rates overall are higher than women’s, possibly due to factors such as women’s less-harmonious attachment to the labor market and different gender composition across industries and occupations. Also, Whites overall enjoy a lower unemployment rate than Blacks, which is at least partly due to the differences in the industries and occupations Blacks and Whites tend to work in.

The movements in the unemployment rates also differ, and this is the puzzle we focus on here. Look closely and you’ll see that unemployment rates didn’t start to decline until late 2011 and early 2012 for Black men and mid-2013 for Black women. The decline for Whites occurs much earlier: early 2010 for men and gradually from 2010 to 2012 for women. Has this difference always existed? We’ll need to look back in time to investigate…

…and fortunately we can use FRED’s time slider at the bottom of the graph to do that. The (second) graph above shows the previous recession in 2001; again, we see a longer lag for Blacks than for Whites for unemployment rates to decline.

Stepping back a bit farther… The (third) graph above shows the 1990-91 recession; it looks like all unemployment rates peaked simultaneously and declined over the same time frame.

The (fourth) graph above shows the 1981-82 recession, where the unemployment rates again peaked simultaneously and declined over the same time frame. We can skip the 1980 recession, as it’s so close to this one.

The (fifth) graph above shows the 1974-75 recession, where the unemployment rates again peaked simultaneously and declined over the same time frame, except for Black women, whose unemployment rates don’t seem to have recovered at all.

Let’s summarize: For the 1974-75, 1981-82, and 1990-91 recessions, Black and White unemployment rates essentially peaked and declined over the same time frame. For the 2001 recession and Great Recession, Black rates took longer to decline than White rates.

What changed?

Even if we can’t provide an answer here, we can suggest where you might do some additional research on the topic. Look to FRASER, FRED’s sibling site, for a deeper examination of historical demographics related to employment: The statistical publications “Employment and Earnings” (1954-2007) and “Women in the Labor Force: A Databook” (2004-2010) are good examples. The latter focuses mainly on differences between the sexes, but also provides statistical tables that relate to race, including one on multiple jobholders.

How these graphs were created: From the employment situation release table, select the series you want according to race, gender, and age and click “Add to Graph.” For all FRED graphs, you have three ways to select the dates you want to display: (1) the date picker above the graph, (2) the time slider below the graph, or (3) selecting the range to highlight within the graph (click and drag).

Suggested by Christian Zimmermann.

View on FRED, series used in this post: LNS14000028, LNS14000029, LNS14000031, LNS14000032

Racial inequality remains after MLK

Data on gaps in unemployment and homeownership

Next Monday we celebrate Dr. Martin Luther King Jr. Day, which honors the man who rose to national recognition beginning with the 1955 Montgomery bus boycotts. Dr. King was a prolific orator and arguably the most prominent and persuasive leader of the U.S. civil rights movement. Less than a week after Dr. King’s assassination, the U.S. House of Representatives voted in favor of the Fair Housing Act of 1968—a law that prohibited discrimination in the renting and purchasing of houses.

How have disparities between White and Black Americans changed since then? To answer part of the question, we look at the gaps in unemployment and homeownership rates between the groups. We define both the unemployment and homeownership gaps as the difference between the Black rate and the White rate. Ideally, both gaps would be equal to zero, indicating no disparity between the two races’ unemployment and homeownership rates.

The difference in unemployment between White and Black Americans is consistently positive, meaning that a higher percentage of Black Americans are unemployed. The gap has fluctuated substantially since the 1970s. The graph (solid black line) doesn’t show any persistent long-run trend, and the unemployment gap is about the same today as it was 50 years ago. The gap peaked in 1983 with a staggering 11.2% higher unemployment rate for Black Americans, and the gap reached its lowest point of 2.8% in 2019. For the past two years, the gap has been 3.9%.

An even larger gap, however, is the one between Black and White homeownership rates (solid blue line). A negative gap in homeownership rates can be interpreted as a lower percentage of Black Americans, compared with White Americans, owning homes. In 2020, Black homeownership was about 30% lower than White homeownership. Unlike the unemployment gap, the homeownership gap does display a long-run trend. Unfortunately, this trend is in the wrong direction—the gap in homeownership rates has increased over time.

Since the early 2000s, the difference in homeownership has gotten progressively starker, with an increase from –26.1% to –30.4% between 2003 and 2020. Because homeownership is an important mechanism for maintaining and growing wealth, these disparities are worrisome.

There has been progress since Dr. King’s passing in the late 1960s, but racial inequalities still exist and leave plenty of room for improvement. Data in FRED can provide one way to measure that progress.

How this graph was created: Search for and select “Unemployment Rate – Black or African American.” From the “Edit Graph” panel, use the “Customize data” search box to select “Unemployment Rate – White” and add and apply the formula (a) – (b). Modify the frequency to quarterly. Next, use the “Add Line” feature to search for and select “Homeownership Rates by Race and Ethnicity: Black Alone in the United-States.” Once again, use the “Customize data” to search for and select the next series, “Homeownership Rates by Race and Ethnicity: Non-Hispanic White Alone in the United States.” Add and apply the formula (a) – (b). Then go to “Format” and under line 2 change “Y-Axis position” to “Right.”

Suggested by Julian Kozlowski and Sam Jordan-Wood.

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